June 2011

Retirement Planning

October 20, 2009

This is the name for the federal program and corresponding state programs that pick up healthcare costs for indigent children and adults. Unless you’re below the poverty line or you spend out your assets in your senior years, this won’t be part of the discussion.

There is one benefit Medicaid offers that might tempt people to wonder about trying to qualify for Medicaid.That benefit is long term care.The downsides though are sufficiently scary for most people so as to dissuade them from attempting this.

October 19, 2009

You have a six-month window to enroll for Medicare starting three months before your 65th birthday and ending three months after. As mentioned above, if you’re already receiving Social Security at age 65, you’ll automatically be enrolled in Part A, but if not and you enroll more than three months after your 65th, you may be subject to a late enrollment penalty.

You will be enrolled automatically in Part B, if you are receiving Part A automatically.Suppose you don’t want Part B?You’ll need to take affirmative action not to be enrolled.Also, signing up beyond three months after your 65th birthday may result in additional fees for your premium unless you qualify for one of the Special Enrollment Period exceptions.

Part D is entirely different.You may sign up when you sign up for Part A.Or, every November 15-December 31 is an open enrollment period during which you can join.Further, during this open enrollment period you can switch from one plan to another.As with other Parts of Medicare, late enrollment in Part D may lead to higher premiums.

October 16, 2009

So-called “Medigap” coverage is supplemental coverage that’s available for people who opt to be covered under Original Medicare’s Part A and Part B coverage. You buy Medigap insurance from a private insurer.Your primary goal is to determine whether that supplementary coverage actually pays for the things you know you’ll need that Medicare doesn’t cover. You do have to pay a monthly premium for this coverage. And again, if you choose Medicare Advantage (Part C) coverage, you’re not allowed to buy Medigap coverage.

There are 12 standardized policies: Plan A to Plan L. Each has a different set of benefits. Medigap policies only work with the Original Medicare plan. You do not need to buy a nor are you even allowed to buy a Medigap policy if you are enrolled in a Medicare + Advantage Plan.

Medigap policies follow certain Federal and state laws designed to protect you. They must be clearly identified as Medigap policies.Medigap policies must provide specific benefits that help fill in the gaps in the original Medicare plan.

Insurance companies must use the same format, language and definitions when describing all of the Medigap policies. They must also use the same uniform chart and outline of coverage to summarize the benefits of each plan.Because of these requirements, it is easier for you to compare the policies of different insurance carriers.Most of the cost difference between providers is due to geographic area of coverage and that particular provider’s claims history.

Standardized Medigap Plans:There are 12 standardized policies. Plan A is the basic benefit package. Each of the other plans includes the basic Plan A, plus different combinations of additional benefits. Plan L will provide the most coverage. Insurance companies cannot change the combinations of benefits or the letter names of them.

Medicare Select:This is a type of standardized Medigap insurance policy. If you choose this policy, you are choosing one of the standardized Medigap plans.

The only difference between Medicare Select and Standardized Medigap insurance is that each insurance company has specific hospitals, and in some cases, specific doctors that you must use. The premiums for this policy are usually lower.

Basic benefits:

•There are basic benefits that every plan (Plans A-L) must include.These are:

•Hospitalization—Pays Part A coinsurance plus coverage for 365 additional days during your lifetime after Medicare benefits end.

The Medicare coverage selection process involves a lot of choices.Be sure to involve those who might be helping to take care of you in this process.Whether it’s your spouse, your children, or someone else, they will want to help.It may make their job of helping you that much easier.

October 15, 2009

Part C is actually the Medicare Advantage Plan.It is an optional plan individuals may choose so they receive their Medicare benefits through private health plans. You’ll also hear this plan referred to as Medicare+Choice.

These private plans include conventional HMOs and PPOs.Medicare+Choice plans are required by law to offer benefits covering everything Medicare covers.Medicare+Choice plans don’t have to cover everything exactly as Medicare Part A and B do. There might be some customized options allowing for lower copayments or lower total out-of-pocket expenses. In simplest language, Medicare Advantage plans blend the benefits of Original Medicare and Medigap plans (more on this in an upcoming post). By law, you can’t buy Medigap supplemental insurance if you’ve chosen Medicare Advantage. However, it’s very important to get some expert advice on the benefits and disadvantages of choosing between Original Medicare and Medicare Advantage plans based on your anticipated health needs.This expert advice can help to make sure the coverage you buy covers what you really need.

When reading our upcoming post on Medigap, keep in mind you may not need Medigap if you choose a Medicare Advantage plan rather than the Original Medicare Plan.

Medicare Advantage Plans are health plans in which private companies contract with the Medicare program to offer Medicare benefits. In order to join a Medicare Advantage Plan, you need to be eligible to participate or already participating in Medicare Parts A and B. With Medicare Advantage plans you pay a monthly premium.Also, you must adhere to rules and regulations established by your plan.Following are the choices offered.

Medicare Preferred Provider Organization (PPOs) Plans:In most of these plans, you pay less if you use primary care doctors, specialists, and hospitals on the plan’s list (network). You can go to any doctor, specialist, or hospital not on the plan’s list, but you will usually pay extra.

Medicare Special Needs Plans:These plans provide health care coverage for people with special needs. Typically, this set of patients includes people who are in nursing homes, people who are eligible for both Medicare and Medicaid and people with certain chronic or disabling services.

Medicare Private Fee-for-Service (PFFS) Plans:Joining one of these plans allows you to go to any primary care doctor, specialist, or hospital accepting the terms of the plan’s payment. The private company, rather than the Medicare Program, decides how much it will pay, and how much you pay for the services you get.

October 14, 2009

While Parts A, B and D of Medicare cover quite a lot of medical expenses, many expenses are not covered.First, consider all of the deductible costs within these three parts of Medicare.Then consider the following list of items.

·Acupuncture

·Dental care and dentures

·Cosmetic surgery

·Custodial care at home or in a nursing home

·Eye refractions

·Care while traveling outside the U.S.

·Hearing aids

·Hearing tests not ordered by a doctor

·Orthopedic shoes

·Long-term care

·Routine foot care

·Screening tests (except those specifically covered under Part B)

·Diabetic supplies

So how do moany people cover these costs?Well, that’s the purpose of Part C.We’ll discuss Part C in greater detail in our next post.

October 13, 2009

Part D is Medicare’s prescription drug coverage. Part D is administered by a number of private insurance companies operating in various areas of the country.Searching for the correct plan in your area requires some shopping on your part to make sure you’re getting the right drugs at the right price. Financial assistance might be available if you need it.

Regardless of what plan you choose, you need to carefully consider prescription drug coverage. On January 1 2006, Medicare prescription drug coverage became available to all Medicare beneficiaries. Everyone with Medicare is eligible for this program.

There are prescription drug plans offered through Medicare Advantage and Other Medicare Health Plans. And there are prescription drug plans that add to the Original Medicare Plan and a few others. These plans are offered by insurance and private companies approved by Medicare.

The prescription drug coverage offers many different plans and you will need to carefully choose your options. When selecting, consider the following items:

Coverage:You will need to consider your current coverage (do you or a spouse already have coverage? How will that affect your options?)

Cost:With Medicare plans you will pay a monthly premium, a deductible, and pay a share of the cost of the prescriptions. While each plan varies slightly, the average monthly premium is around $30 per month. The exact premium depends on the plan you choose.In the beginning of the calendar year, you pay 100% of the cost of your medications until you reach the deductible (which varies based on the plan you choose).Once you reach the deductible, you pay a co-payment for each prescription, and Medicare covers the cost of the medication up to $2,700.00.At this point, you are in what is called the “donut hole,” where you must pay 100% of the cost of prescriptions until you have spent $4,350.00.Once you have spent $4,350.00 out of pocket for the year, the coverage gap ends, and you pay only a small coinsurance or co-payment (approximately 5%) for each prescription until the end of the year.

Medications:It is very important to make sure that your medications are on the formulary for the plan that you choose.Medicare has contracted with private companies in every state to provide the drug coverage.

Convenience:Make sure the pharmacies in your area offer the program and can accept the insurance. Medicare has contracted with private companies in every state to provide the drug coverage but always check with your pharmacy to make sure.

Remember, too, we are coming up to the open enrollment period, November 15-December 31 during which time you can select a different Part D plan from the one you have now. Your new plan would come into effect on January 1, 2010.

There is a wealth of information to help beneficiaries understand their options. Refer to the Medicare guide available at www.medicare.gov.

If you have limited income, help for paying for drug plans may also be available. Talk directly to Medicare about your situation.

Also, signing up for Part D after you are initially eligible may result in your premium being higher due to an added penalty payment.In 2009, the Part D National Base Beneficiary Premium is $30.36, and the 1% Penalty Calculation is $0.30.

October 12, 2009

Part B is all about outpatient services. This is the part of the plan covering doctors’ visits, outpatient care and some other medical services not covered by Part A.These are the services of physical and occupational therapists, and other aspects of home health care. You do have to pay a monthly premium for Part B coverage with a deductible.In 2009, the basic premium is $96.40 per month though it might be higher for some people who have high incomes, above $85,000 (single tax filers) or $170,000 (married filing jointly). By the way, you’ll sometimes hear Part A and Part B coverage referred to as the “Original Medicare.”

Medical and Other Services:Doctors’ services (not routine physical exams except for a “Welcome to Medicare” one-time physical exam within the first six months you have Part B), outpatient medical and surgical services and supplies, diagnostic tests, ambulatory surgery center facility fees for approved procedures, and durable medical equipment (such as wheelchairs, hospital beds, oxygen, and walkers).Part B also covers a second, and sometimes a third, surgical opinion for surgery that isn’t an emergency (in some cases), outpatient mental health care, and outpatient occupational and physical therapy, including speech-language pathology.These services are also covered for long-term nursing home residents.

Home Health Care: Limited to reasonable and necessary part-time or intermittent skilled nursing care and home health aide services as well as physical therapy, occupational therapy, and speech-language pathology ordered by your doctor and provided by a Medicare-certified home health agency. Part B also includes medical social services, durable medical equipment (such as wheelchairs, hospital beds, oxygen, and walkers), medical supplies, and other services.

OutpatientHospital Services: Hospital services and supplies received as an outpatient as part of a doctor’s care.

Blood: Pints of blood you get as an outpatient or as part of a Part B-covered service.

Preventive Services: Part B also covers many preventive services.

It is important to remember if you don’t choose part B when you first become eligible you can join later.Unfortunately, the cost goes up 10 % for each 12 month period you did not sign up, when you could have and were eligible.

When it comes to paying the premium, if you receive a Social Security check, the premium will automatically be deducted.

One other critical point for 2010, Part B premiums will be increasing. Social Security payments will not be increasing.Many people have heard incorrectly in the media that their Social Security payments are going down in 2010. It is NOT true for most Social Security recipients!The Part B premium is going up, that is true. There is a stop-loss provision for taxpayers earning below $85,000 (single filers) and $170,000 (married joint filers). The stop-loss provision ensures the Social Security payments for these filers WILL NOT decrease in 2010, regardless of the increase in 2010 Part B premiums.

October 09, 2009

Medicare coverage is divided into three primary parts: Part A, Part B, Part C, and Part D. We'll cover each Part over the next few posts.

Part A is the segment of the program most associated with hospital care and is often referred to as hospital insurance.Part A covers hospital inpatient care, a limited amount of care at some skilled nursing facilities, some specific home health care alternatives and hospice care. Most people are enrolled automatically in Part A when they reach 65 and they get this coverage without any premium payments.Workers paid for this coverage while working and paying social insurance taxes at a rate of 1.45% of their taxable income.

Hospital Stays:Semiprivate room, meals, general nursing, and other hospital services and supplies. This includes inpatient care you get in critical access hospitals and mental health care facilities. This does not include private duty nursing, or a television or telephone in the room. It also doesn’t include a private room, unless medically necessary. Inpatient mental health care in a psychiatric facility is limited to 190 days in a lifetime.

Skilled Nursing Facility Care: Semiprivate room, meals, skilled nursing and rehabilitative services, and other services and supplies (only after a related three-day inpatient hospital stay, the first 20 days of skilled nursing facility care are free).There is an applicable co-pay for skilled nursing care after of $133.50 per day for days 21 through 100 of a stay, and the patient must pay 100% of the cost for each day after the 100 day benefit period.

Home Health Care: Limited to reasonable and necessary part-time or intermittent skilled nursing care and home health aide services as well as physical therapy, occupational therapy, and speech-language pathology that are ordered by your doctor and provided by a Medicare-certified home health agency. Also includes medical social services, durable medical equipment (such as wheelchairs, hospital beds, oxygen, and walkers), medical supplies, and other services.

Hospice care:You pay a co-payment for outpatient prescription drugs. Room and board are generally not payable by Medicare except in certain circumstances.

Blood during hospital stay or nursing home stay:You pay for the first three pints, unless you or someone else donates blood to replace what you use. Beyond three pints, costs are covered.

There are some costs associated with Part A such as $1,068 deductible for days 1-60 of your hospital stay. For days 61-90, you pay $267 per day.After day 90, you pay $534 per lifetime reserve day, up to 60 days not subject to a particular benefit period.These costs are on a benefit period basis. A benefit period begins when you enter a hospital or skilled nursing facility and ends when you haven’t received inpatient care at either facility for at least 60 days.

For those who do not receive premium free Part A, it can typically be purchased. The premium per month in 2009 is up to $433. If you have limited income, the state can possibly help you pay. Inquire about details at your Social Security office. The Medicare guide available online or through your Social Security office covers more detailed information.

One very important point is Medicare doesn’t cover long-term nursing home expenses, so long-term care planning is necessary for all individuals.

October 08, 2009

More people than you might think. Medicare is available to anyone over the age of 65 who is a US citizen or a permanent legal resident for five continuous years. Yet people under the age of 65 may qualify under certain circumstances.These cases include those who are permanently disabled and have received Social Security disability payments for the last two years.Also, if someone needs a kidney transplant or receiving dialysis for permanent kidney failure, they qualify for Medicare.Finally, anyone unfortunate enough to have Amyotrophic Lateral Sclerosis, also known as Lou Gehrig’s disease qualifies for Medicare.

We’ll mention how a covered individual pays for their coverage under our discussion of each individual part of Medicare.Each part has its own unique payment approach.This can make the whole program a little confusing. Imagine that, a multi-billion dollar government program that might be a little confusing!

Remember, Medicare is a federal program.On the other hand, Medicaid is a state-run program, partially funded with federal monies.

October 07, 2009

Despite all the public discussion about health care, very few people under the age of 65 understand the basics of Medicare or Medigap. Medicare is the federal health program for seniors and certain disabled individuals.Medigap is supplemental private coverage many seniors buy to cover treatment the shortfalls in coverage provided by Medicare.

Even there are many years before you qualify, why focus on Medicare and Medigap now? Because as big changes happen in our healthcare system, those who understand the programs and products ahead of time will not only be better equipped to plan for their post-retirement healthcare options, but they’ll have a better understanding of how these critical federal programs change over time.

Further, you may be called on to help an older person in your life, say a parent, sibling, aunt, or uncle.With the knowledge you can gain about these programs now, you’ll save a bunch of headaches later, and may even save the life of a loved one.

Over the next few posts we’ll deliver a summary of Medicare, Medigap, and even one post dealing with Medicaid.